Global OTC market still subdued in Q2

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New figures from Nicholas Hall’s OTC sales database DB6 reveal that, in MAT Q2 2019 (the 12 months to end-June 2019), the global OTC market remained subdued, recording an increase of just 3.6% to total US$137.9bn in turnover. North America generated growth of 2.6%, with USA (+2.7%) improving slightly compared to MAT Q1; however, the market continues to be held back by a lack of switch activity. Canada performed poorly with sales up by just 2.1%.

In Europe (+2.1%), the OTC market also remained sluggish, with most key markets posting low single-digit growth, while Russia (-0.6%), France (-1.4%) and Switzerland recorded declines. Germany (+0.1%), Italy (+2.6%) and the UK (+1.1%) all managed modest increases. Poland was the one bright spot with a rise of 7.9%, driven by high levels of NPD and Rx-to-OTC switch activity. Looking at the Middle East & Africa, Turkey (+15.8%) remained the fastest-growing of the Top 20 markets, driven by high inflation.

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As for Asia-Pacific, growth decelerated to 4.2%, with slowdowns recorded in China (+5.3%), India (+7.5%) and Australia (+1.6%), while sales in Japan (+0.9%) remained flat. Both China and India were impeded by a comparatively low-key cough & cold season and weakening economies. Latin America (+8.3%) continued to be the best performing region, with the two largest OTC markets Brazil (+7.7%) and Mexico (+9.3%) showing resilience in the face of a challenging macroeconomic landscape.

Vitamins, minerals & supplements still generate the largest share (30%) of the global OTC market by major category, but growth slowed in Q2 to 3.7%. Key categories like probiotics and multivitamins reported slowdowns in Q2 2019, especially in the USA, which is struggling this year to replicate the strong performance of its dietary supplements market in 2018.

Nicholas Hall’s Future Opportunities & Growth Drivers in VMS – A Strategic Review of Vitamins, Minerals & Supplements is now available! This all-new report analyses a range of VMS categories including multivitamins, probiotics, OTC tonic drinks, mineral supplements plus many others, alongside looking at the latest trends, brand studies and launch activity. Click here to purchase your copy or to take a look at the full table of contents! To find out more about this key report, or to order your copy, please contact Melissa.Lee@NicholasHall.com

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Natural & Organic a focus for M&A and innovation

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Continuing our series of blogs on the 10 Infinity Zones for future CHC growth recently outlined by Nicholas Hall, in this edition we take a closer look at natural & organic products. This is by no means a new trend, but it’s certainly one increasingly on the radar of multinationals, as exemplified by J&J’s recent purchase of Zarbee’s Naturals.

Among herbal & natural cough remedies, Zarbee’s has been gaining share on rivals such as Little Remedies, Hyland’s and Chestal, while also growing faster than most medicated OTC cough remedies. Another growth driver in the US market is Maty’s all-natural and organic range, including honey-based cough remedies, while Unilever recently bought Olly Nutrition, another range of VMS products with a strong emphasis on natural ingredients, such as the 10 phytonutrients in its Super Foods Multi line.

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A+P for most herbal & natural products often emphasises the importance of quality standards and – increasingly – organic and responsibly-­sourced ingredients. In China, the No.1 probiotic brand Biostime (Health & Happiness for Institut Rosell) is promoted on the basis of the organic sourcing of its ingredients, while marketing involving brand ambassador Juliette Binoche also emphasises the natural heritage of the brand.

According to OTC New Products Tracker, the number of launches that include the word “organic” either in their branding or list of ingredients is growing fast, with 246 innovations in 2018 vs 168 in 2017 and just 81 in 2016. Over half of these products are unsurprisingly classified as vitamins, minerals & supplements, however there is also a growing number of “organic” Lifestyle OTCs, especially among medical cannabis products, sedatives & sleep aids and stimulants.

Last chance to pre-order Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

Prevention better (and growing faster) than cure

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For many years now, Nicholas Hall has been highlighting how OTC subcategories focused on prevention are growing faster than those directed towards treatment or intervention. This long-term trend in the CHC industry continues to take root, thanks to the growing power of categories like probiotics (another Infinity Zone, covered in last week’s blog).

At this year’s Vienna conference, Nicholas Hall presented a slide of the fastest-growing OTC subcategories by CAGR (2014-18), comparing those focused on prevention with those centred around treatment, and this showed that seven of the Top 10 most dynamic subcategories in recent years had a preventive focus. Sexual health is a relatively new driver of this trend, with two subcategories in the Top 5 – erectile dysfunction and emergency hormonal contraception.

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Vitamins, minerals & supplements have long been the main driver of this prevention trend, with probiotics and vitamin D the two key subcategories. Innovation and niche product positioning (i.e. to prevent allergies, candidiasis, age-related illnesses, etc) have helped fuel probiotics growth, while the dynamism of vitamin D sales has been driven by rising awareness of the high levels of deficiency in many markets and the benefits  of supplementation.

Herbal memory & brain health is an increasingly attractive subcategory, as exemplified by RB’s recent launch of Neuriva, a new product designed to support “brain fitness” and prevent cognitive decline. Royal jelly is taken widely in Europe and Asia-Pacific as a way to prevent fatigue, while just outside the Top 10 in CAGR terms are magnesium, zinc, pregnancy vitamins and hair & beauty supplements. According to OTC New Products Tracker, the latter was the fifth most active OTC subcategory in 2018 in terms of launch activity, with 150 innovations.

Last chance to pre-order Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.

AI to power personalised nutrition

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An article that appeared over the weekend in The New York Times by US cardiologist and digital medicine researcher Eric Topol pointed to the power of artificial intelligence to provide personalised diet and nutrition advice. Algorithms that could advise us on what’s lacking in our diet and recommend supplements or foods that would fill those gaps hold great promise for both consumers and VMS marketers, and rapid advances in AI technology are bringing such a reality closer.

However, Topol says that the science of nutrition still remains in its infancy, and that most studies rely on observational data such as food diaries, unreliable sources of information which prevent any high-quality trials establishing cause and effect. More importantly, Topol says the central flaw in this field of research is the idea that there is one optimal diet for all people.

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One pioneer in the field of personalised nutrition is US supplement marketer Thorne, which repackaged its products and launched a new range of at-home diagnostic tests in 2018, providing personalised health and diet plans, including VMS supplement recommendations. Other US VMS marketers operating in this emerging field of personalised nutrition, and which have launched products recently picked up by Nicholas Hall’s OTC New Products Tracker, include Ladder and Persona.

There is also the emerging field of nutrigenomics, with companies marketing DNA tests that offer personalised diet plans, though Topol advises caution here, saying that a truly personalised diet would involve taking many more factors into account than just genetics. He cites the importance of microbiome analysis, lifestyle, medication, family history, immune system and many other factors, and says that no AI is yet on the market that can analyse all this data and offer personalised solutions.

But there is cause for hope. Studies monitoring spikes in blood glucose levels after eating have made some breakthroughs, pointing to the importance of our gut microbiome, and there is now a commercial version of the DayTwo personalised nutrition test available, based on the research of Dr Segal and Dr Elinav. Topol also mentions other advances, such as AI deep learning tools that can analyse smartphone photos of a user’s meals to record nutritional intake, replacing the need for food diaries. Topol also stresses the importance of wearables, such as smartwatches and skin patches, as aids in unlocking a future of virtual health coaches offering personalised nutrition advice to us all.

Review 17,000+ new launches and innovations with OTC New Products Tracker, the ultimate competitive intelligence tool! Products are given a star rating, with “me too” items ranked 1*; launches / line extensions in a new category / adjacency 2*; major launches / line extensions with strong new benefits / positioning 3*, and 1st Rx-to-OTC switches in a category, creation of a new OTC class or other major leaps in innovation 4*. With a recently-released major update including eye-catching new graphics and powerful search filters that help you visualise and explore the vast archive according to your exact requirements, now is the ideal time to set up your free trial. For a demo or more information, contact waisan.lee-gabell@NicholasHall.com.

MAT Q2 2018: 5 Key Trends & Developments

Our latest Q2 2018 trend reports on the OTC market at global, regional and Top 20 level are now available on the OTC DASHBOARD website. Here we highlight some of the key trends & developments that have emerged in the latest data.

  1. Europe and Asia drive CCA upturn: Improving CCA growth helped the global OTC market report a slight upturn in Q2 (+4.2%). This followed a return to CCA growth in Europe (+2.7%) in Q2 2018, powered by the UK (+5.8%) and Germany (+4.1%), while France (+0.5%) also returned to positive territory. CCA growth in Asia-Pacific (+5.7%) likewise improved in Q2, thanks to a clear upturn for Systemic cold & flu (+4.7%), with key markets like S Korea enjoying high growth (+6.6%) on the back of OTC innovations such as the relaunch of Dong-A’s Pantec Q.
  2. Sanofi reclaims the No.3 spot from J&J: While GSK maintains its clear lead as the global OTC No.1 marketer, a tight three-way race remains in play for the No.2 spot between Bayer, Sanofi and J&J. Bayer is still the global No.2, while Sanofi reclaimed its position as the global No.3 in Q2 2018, moving ahead of J&J. In Sanofi’s Q2 results, the company reported a return to OTC growth in Europe and a continued strong rise in Emerging Markets, especially in Latin America. The company reported a CCA upturn in both regions, offsetting US allergy decline.
  3. US market behind VMS upturn: Higher Q2 growth in North America’s vast supplements market (+4.0%) has been the key trend behind the improving global picture. In Q2, multivitamins (+2.8%) underwent a clear upturn while the trend for probiotics (+6.9%) and immune supplements (+10.4%) also improved. The latter category has been a particularly vibrant source of OTC innovation in recent months; for example, Nestle has launched elderberry immune gummies as part of its mykind Organics line, while post-surgery immunity supplements and those with a digestive health crossover have also been popular.
  4. Where’s the growth potential? 1. Adjacencies: OTC marketers are increasingly looking to build new consumer healthcare adjacencies, either via switch – in the case of erectile dysfunction and Pfizer’s Viagra Connect – or new product innovation, in the case of medical cannabis. Canada recently voted to legalise cannabis, though the future for CBD and THC supplements remains uncertain. We don’t yet include sales of medical cannabis products in OTC DASHBOARD, though we do track developments in this category closely in both our innovation database, OTC New Products Tracker, and regulatory newsletter, OTC.NewDirections.
  5. Where’s the growth potential? 2. New territories: Rest of World countries (mainly Middle East & Africa) enjoyed continued high in Q2 2018, with sales up 6.6% in the 12 months to end-June 2018, to total US$9.2bn. High growth for analgesics (+7.2%) and CCA products (+6.7%) ensured a strong regional rise overall, allied with a dynamic performance in the key regional market of Turkey (+13.3%). RB is one marketer performing well in the region, claiming a spot among the Top 5 OTC marketers in Q2 2018, following dynamic growth of its CCA portfolio, powered by sore throat remedy Strepsils and its strong support via A+P and line extensions.

With M&A activity in the CHC industry increasing rapidly, now may be the right time for your business to explore growth opportunities. Our specialist M&A boutique is working with a number of strategic and financial partners to assess potential opportunities — for buyers and sellers — and is well placed to discuss the current business climate and possible synergies. To find out more, please contact ammar.basit@NicholasHall.com

J&J to buy Zarbee’s

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J&J Consumer has entered into a definitive agreement to acquire natural healthcare products company Zarbee’s Naturals for an undisclosed sum. With a 50% CAGR, the Zarbee’s Naturals business racked up sales of US$68mn in 2017, according to Nicholas Hall’s global OTC sales database DB6, and there is lots of room for growth ahead.

J&J’s VMS portfolio accounts for just 0.1% of its total consumer healthcare business, so the Zarbee’s deal will provide a significant boost (see the table from OTC DASHBOARD below showing J&J’s current OTC sales split by major category). There will also be scope to build the brand internationally – at present, Zarbee’s focus is almost exclusively on the US market, so J&J will likely use its considerable marketing muscle to roll out the brand in other key regions where it has a strong presence, like Europe and Asia-Pacific.

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Founded in 2008, Zarbee’s Naturals is majority owned by the Growth Fund of L Catterton in partnership with various minority owners, including Sorenson Capital. The deal, which is expected to complete in Q3 2018, will include the full line of Zarbee’s Naturals products for children and adults.

Product innovation has been one of the main drivers behind exceptional growth for Zarbee’s Naturals. In April 2018, the company introduced three Children’s Complete Multivitamins in a gummy format, including Complete Multivitamin + Iron, Complete Multivitamin + Probiotic and Complete Multivitamin + Immune. In partnership with Amazon, Zarbee’s also released a Baby Bee Essentials Gift Set complete with a bee romper and products such as Gripe Water and petroleum-free Baby Soothing Chest Rub. Paediatric products like these will fit well with J&J’s family-friendly image.

As Health and Wellness climbs up the list of consumer priorities, the market for herbal and natural options is booming. Take a look at what the future holds for this market with Nicholas Hall’s upcoming report Herbals & Naturals: Opportunities in a Vast & Dynamic Area of Consumer Health. Scheduled for publication in August, this report will include coverage of 9 leading global markets, analysis into a wide range of categories including Herbal & Natural Supplements, Topical Analgesics, Cough Remedies, Laxatives and more, plus forecast sales. Benefit from early bird rates when you pre-order today! For more information, or to pre-order your copy, please contact melissa.lee@nicholashall.com.

Avon enters VMS category

As this week’s OTC DASHBOARD infographic shows, the percentage of Americans that consume dietary supplements continues to grow, hitting an all-time high of 76% in 2017. This has helped create a vast US vitamins, minerals & supplements category, which in turn continues to attract the interest of companies not traditionally associated with the OTC market. For example, Amazon launched several supplements as part of its Amazon Elements line in spring 2017, including vitamin D, turmeric and calcium products, all of which have a strong emphasis on ingredient traceability.

Another new entrant in 2018 is Avon, a company that is undergoing a rapid transformation to become the “leading social selling company in North America”, according to CEO Scott White. Part of the company’s strategy is a return to the health & wellness market, including the launch of a new Espira line of 11 dietary supplements.

Launched in January 2018, and available at a retail price of US$12-35 through Avon Representatives or http://www.avon.com, Espira for Avon is categorised into three principles of wellness:

  • Restore contains 2 sedatives & sleep aids and 2 multivitamins, with ingredients that help to reduce occasional stress and enhance restful sleep, including Sensoril, L-theanine, vitamin B, magnesium, fish oil + antioxidants from fruits & vegetables
  • Boost is subdivided into Metabolism Boost and Natural Energy products, with ingredients such as protein, probiotic, fibre, green tea, cacao + whole coffee fruit to help maintain a healthy metabolism, clear out the system and control hunger
  • Glow contains 3 health & beauty supplements formulated with antioxidants, biotin, vitamin C + collagen peptides to help hair, skin and nails look their best by protecting from daily damage and restoring cells while you sleep

As with the Amazon Elements range, Avon’s new products will be sold via the e-commerce channel, while the company will also be looking to steal share from multilevel and direct marketers such as Herbalife and Amway.